Families may take home $13,700 with the new baby

Mothers with children under five could receive a tax-free annual salary of $10,700 plus a $3000 subsidy for each child under a proposal that would see some family benefits scrapped.

Researcher Lucy Sullivan, who has worked for Liberal Party think-tank the Menzies Research Centre, has calculated that the universal payment would cost taxpayers a minimum of $1.6 billion extra a year.

It is understood that her detailed costings have been circulated within the Government.

Ms Sullivan's proposal would enable the Government to help Australians better balance work and family, but would not influence mothers choosing between returning to work and staying at home with the children.

Ms Sullivan suggests that all mothers with children under five should be given a minimum payment of $13,720 a year for the first five years of the child's life.

This would include a "mother's" salary of $10,691 - equal to the existing parenting payment and family tax benefit part B - and a $3029 subsidy for each child under five.

This tax-free money could be used for childcare or to supplement the family income if the mother remained at home.

The salary and subsidy would replace the baby bonus, family tax benefits, the child care benefit, parenting payment for mothers with children under five, youth allowance, childcare centre subsidies and public service paid maternity leave.

Ms Sullivan estimates these existing benefits cost the Government $18.1 billion a year.

Replacing them with a mother's salary and subsidy for all children up to the age of 20 would cost between $1.6 billion and $5.45 billion more, depending on the amount of subsidy paid.

Despite naming work and family as a third term priority, of government in August 2001, the Prime Minister, John Howard, has yet to deliver a concrete policy.

It is believed Mr Howard favours a universal payment, such as the one Ms Sullivan is proposing. It is likely this would apply to whatever parent stayed at home with the child.

The Opposition yesterday attacked the Government over a leaked report from the Prime Minister's own work and family taskforce. The report, which went to cabinet in December 2002, appeared to favour Labor's work and family policies.